Experts set to tackle evolving landscape of medical payments

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As UPMC gastroenterology division chief David C. Whitcomb sees it, those are the options facing the hospital system’‍s pancreas, biliary and hepatology center. And it’‍s the same stark option, he says, facing other high-priced, high-complexity specialties, as well as the academic medical and research centers that typically house them.

That’‍s because health insurers and government insurance programs are, slowly but surely, shifting away from the “fee-for-service” system under which doctors and hospitals are paid for every unit of care they dispense, and toward systems that reward quality and encourage cost control. The strictest of those systems resemble the capitation models of old, under which a medical practice or a specialty group is asked to treat its patients on a set budget.

The modern version of the capitation scheme is called an accountable care organization, and ACOs — large groupings of clinics and physicians, all working within a budget for its patient population — are considered by many to be a key to bending the health care cost curve. Practices and hospitals aren’‍t necessarily compelled to reorganize under such a payment model, but health insurers and the U.S. Centers for Medicare and Medicaid Services believe shared risk is an essential component of health care overhaul, and they are pushing health providers to rethink the way they are compensated.

In ACOs, physicians are asked to take on some of the cost risk in treating patients, a financial risk that previously had been borne solely by the health insurer and the employer paying the health care claims. In the ACO model, physicians can be financially punished for overshooting a budget, but also can share in the savings if they come in below budget.

Those twin cost incentives are at the heart of Dr. Whitcomb’‍s concern. How can expensive, urban academic specialty practices and research centers survive if hospital systems are rewarded for steering care to cheaper settings?

“The broad issue is that academic medical centers are usually seen as more expensive than community hospitals when it comes to” providing care, he said.

And, usually, they are. But there is value in that expense, Dr. Whitcomb said, particularly when it comes to complex diseases. Treating a complex pancreas problem might be expensive at UPMC Presbyterian, but farming a challenging case out to a cheaper suburban hospital can deprive research hospitals of the patients they require in order to continue learning about disease and treatment.

And the treatment itself, he cautioned, can sometimes backfire.

He’‍s seen “million-dollar insurance debacles because [patients] went to the wrong place and got the wrong treatment,” he said. If a patient and an insurer “can avoid a disaster, how much is that worth? ... To the patient, it’s worth a whole lot. To the insurer, a million-dollar bill, that’s a lot of care that could have been spread around.”

Proving that worth and value, he said, will be the trick going forward for academic hospital units that specialize in complex diseases. If they don’‍t demonstrate that value, “we’‍re extinct,” he said.

That’‍s one reason Dr. Whitcomb is convening experts in his field this week, starting today, for PancreasFest 2014, a conference at the University of Pittsburgh. Most of the conference will deal with clinical and therapeutic issues — pancreatitis, pancreas cancer — but on Friday, Dr. Whitcomb and others will hold session on “pancreas centers of excellence.”

Part of that session will be about sussing out setting standards for such centers, and then making the case to those paying the medical bills that treatment at such centers is worth the money.

Academic medical centers in general — not just the high-complexity services within them — face challenges when it comes to ACO reorganization. Of the ACOs that have been approved for participation in Medicare’‍s accountable care project, called the Medicare Shared Savings Program, only 20 percent have been established at academic medical centers.

“Academic medical centers have unique challenges, often cultural and financial,” in adapting to the ACO model of shared financial risk, according to a paper on the subject appearing this summer in Academic Medicine, a publication of the Association of American Medical Colleges.

“Whereas most health systems are focused on providing clinical care, and may create processes to improve the quality and efficiency of this care, [academic hospitals aim at] providing subspecialty care; emphasizing research and discovery; and educating trainees about and within the care delivery process.”

All that training and research is expensive. As a result, “they have to adapt,” said Scott A. Berkowitz, co-author of the Academic Medicine paper and CEO of the Johns Hopkins Medicine Alliance for Patients, the Baltimore health network’‍s version of the ACO. “For the first time, they have to be accountable for value” as well as clinical and post-procedural outcomes.”

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